Extracellular ATP regulates bile formation by binding to P2 receptors on cholangiocytes and stimulating transepithelial Cl⁻ secretion. However, the specific signaling pathways linking receptor binding to Cl⁻ channel activation are not known. Consequently, the aim of these studies in human Mz-Cha-1 biliary cells and normal rat cholangiocyte monolayers was to assess the intracellular pathways responsible for ATP-stimulated increases in intracellular Ca²⁺ concentration ([Ca²⁺]_i) and membrane Cl⁻ permeability. Exposure of cells to ATP resulted in a rapid increase in [Ca²⁺]_i and activation of membrane Cl⁻ currents; both responses were abolished by prior depletion of intracellular Ca²⁺. ATP-stimulated Cl⁻ currents demonstrated mild outward rectification, reversal at E_Cl⁻, and a single-channel conductance of ∼17 pS, where E is the equilibrium potential. The conductance response to ATP was inhibited by the Cl⁻ channel inhibitors NPPB and DIDS but not the CFTR inhibitor CFTR_inh-172. Both ATP-stimulated increases in [Ca²⁺]_i and Cl⁻ channel activity were inhibited by the P2Y receptor antagonist suramin. The PLC inhibitor U73122 and the inositol 1,4,5-triphosphate (IP3) receptor inhibitor 2-APB both blocked the ATP-stimulated increase in [Ca²⁺]_i and membrane Cl⁻ currents. Intracellular dialysis with purified IP3 activated Cl⁻ currents with identical properties to those activated by ATP. Exposure of normal rat cholangiocyte monolayers to ATP increased short-circuit currents (I_sc), reflecting transepithelial secretion. The I_sc was unaffected by CFTR_inh-172 but was significantly inhibited by U73122 or 2-APB. In summary, these findings indicate that the apical P2Y-IP3 receptor signaling complex is a dominant pathway mediating biliary epithelial Cl⁻ transport and, therefore, may represent a potential target for increasing secretion in the treatment of cholestatic liver disease.